Participating preferred stock is a type of preferred stock that gives the holder a right to be paid first, before common stockholders (non-preferred) in the event of a dividend or liquidation payout. Additionally, the holder has the right to participate along with the common stockholders in receiving payment on the remaining payout. This form of financing is used by private equity investors and venture capital firms.
[Last updated in November of 2023 by the Wex Definitions Team]
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